The influence of labour legislation on job creation and job sustainability in South Africa

Abstract

The South African economy is faced with a number of challenges, especially high levels of poverty and unemployment. Job creation and job sustainability is of paramount importance, especially during the current economic climate in South Africa. Hence, the primary objective needs to be growth, job creation and job sustainability. There is a need not only to create more jobs, but also to sustain existing jobs. At issue is the influence of labour legislation on job creation and job sustainability. This study is multi-disciplinary and is located in the fields of management and law. It attempts to explore how the current labour legislation in South Africa influences job creation and job sustainability and whether the call for the de-regulation of and a more flexible South African labour market will improve business and investor confidence, as well as create and sustain jobs. This study was motivated by the attention given to the on-going debate amongst the business community, unions, economists and the media about unemployment, job losses, economic growth, prospects of job growth and job creation in the current local and global economic climate. This doctoral exploration focused on how labour legislation, inter alia, the Basic Conditions of Employment Act No. 75 of 1997; the Labour Relations Act No. 66 of 1995; the Employment Equity Act No. 55 of 1998; the Skills Development Act No. 97 of 1998, and the Broad-Based Economic Empowerment Act No. 53 of 2003 influences job creation and job sustainability in South Africa. The unique contribution to knowledge creation was unearthing the hidden sentiments of the business and trade union participants and respondents on how the current labour legislation influences job creation and job sustainability in South Africa. Recently there has been an increased interest in the role of labour legislation in regulating the employment relationship, as well as increased criticism of labour legislation over-regulating the labour market. The legislature responded by making amendments to the current labour legislation, which in turn fuelled the on-going

debate about the influence of labour legislation on economic growth, on businesses in general, job creation, job sustainability and on labour market flexibility. The concern was that the legislative amendments would result in further regulation of an already over-regulated inflexible labour market, greater job losses and greater unemployment. However, labour disagreed as they felt that further in the current economic climate, greater labour protection was required. Consequently, the business community, labour and society in general strongly objected to some of the amendments to the labour legislation. Consequently, the on-going criticism of the current labour market in South Africa being over-regulated and stifling economic growth, job creation and job sustainability required further exploration and investigation. The South African business community proposed the de-regulation of current labour legislation in South Africa as a solution to assisting with job creation, job sustainability and to avoid further job losses. The South African legislature responded with amending certain aspects of the various pieces of labour legislation in an attempt to introduce greater flexibility and protection. However, the concern was that the legislative amendments would have the opposite effect, increase regulation and make the labour market even more inflexible. This research attempted to respond to these views by exploring and determining how labour legislation influenced job creation and job sustainability in South Africa. The issue of labour legislation s influence on job creation and job sustainability was addressed by looking at the influence of the 1996 Constitution of South Africa and current legislation, in particular labour legislation, as amended, had on job creation and job sustainability. The purpose of this study was therefore to explore, determine and understand how the current labour legislation in South Africa influenced job creation and job sustainability. The overall aim was to examine whether the South African labour market should be de-regulated and if so, to what extent; whether the amendments to the labour legislation made the labour market environment more flexible; as well as whether it improved business and investor confidence, stimulated job creation and encouraged job sustainability.

In pursuit of this broad aim, the researcher took an interpretive, pragmatic, parallel convergent mixed-method approach. The foundation of the research design is a combination of the use of the literature surveyed in Chapters Two and Three herein, together with the responses to the survey questionnaires and the answers to the interview questions from interviews conducted with businesspersons, senior managers, entrepreneurs and trade unionists, including senior trade union officials in South Africa. A dual approach with two types of research instruments, both the survey questionnaire and the interview questionnaire, was used. A mixed-methods research methodology (Creswell, 2014: 69) was deemed to be the most appropriate method for this study, in which qualitative and quantitative techniques, methods, approaches, concepts and language were mixed and combined. The whole of South Africa was purposefully selected as the area in which to conduct the research. The data production process entailed examining local and foreign literature, self-administered survey questionnaires, and conducting phenomenological interviews. The main source of data was obtained from the online research questionnaire developed by the researcher using Google Forms. The invitation and link was emailed to each of the respondents, who completed the survey questionnaire online. Information was also obtained from the semi-structured, mostly telephonic interviews, conducted with some of the respondents, who had agreed and indicated that they were also willing to participate in an interview conducted by the researcher. The interview schedule was also developed by the researcher. Amongst the respondents surveyed and participants interviewed, there were chief executive officers, senior managers, managers, entrepreneurs representing public and private companies, close corporations, sole proprietorships and partnerships from various industries and sectors across South Africa. There were also senior trade union officials and trade unionists representing various trade unions across various sectors and industries across South Africa. Due to distance and time constraints, an overwhelming majority of the interview participants agreed to be interviewed telephonically instead of face-to-face, which saved the researcher a great deal of expense with regard to travelling and accommodation, for which the researcher is deeply grateful to the interview participants. The quantitative data and qualitative data were first analysed separately using both SPSS version 24.0 and NVIVO PRO version 24.0 statistical packages to establish

the opinions and perceptions of entrepreneurs, managers and trade unionists. The constant comparative method of qualitative analysis was used. Data reduction was carried out in three stages, each representing a progressively higher level of theoretical abstraction. The results from each strand were subsequently combined, conclusions were drawn and recommendations made to all relevant stakeholders in respect of the findings. The findings of the research are expressed as an integrated theory and as a series of propositions, generalized within the boundaries of the study, relating to the influence of labour legislation on job creation and job sustainability in South Africa. The conclusions are summarized in seven statements. Firstly, labour regulation is necessary; it fulfils a normative role and plays an important role in ensuring fairness and equity in the employment relationship. Secondly, labour legislation, in regulating the employment relationship and the enforcement of compliance, influences job creation and job sustainability. Thirdly, the LRA, the EEA and the B-BBEEA, in regulating equity and fairness overall, have influenced job creation, some to a greater extent than others. Fourthly, businesses which are incentivised by the SDA, the EEA, the B-BBEEA, the ETIA and the UIA to train and develop their workers are expanding, growing, creating and sustaining jobs. Fifthly, labour legislation per se is not the problem, but rather the implementation thereof is. Sixthly, the administrative burden and the cost of compliance with the BCEA, the LRA, and the SDA threaten existing jobs and job creation. Finally, the administrative burden of complying, the enforcement of compliance and the costs of compliance with the B-BBEEA and the EEA are impeding job creation and job sustainability. The skills shortage in South Africa has adverse consequences for all South Africans, including the business community. The political and economic uncertainty have a negative influence on local and foreign investor confidence, which has a negative impact on the South African economy. It is important from both a societal and business point of view that social justice, the right to fair labour practices and the respect for fundamental human rights continues to be affirmed. Trade unions are perceived to be a social justice movement (Wolterstorff, 2013:394) and can participate in job creation by influencing macro- economic and social policies at multipartite structures by facilitating skills development and by directly creating jobs (Mwilima, 2008:7). Deregulation of the

work environment would undermine the fundamental rights that South African citizens, as well as local and international business, enjoy. This, in turn, will have an adverse effect on local and foreign investor confidence in the South African government and its economy. It is therefore important that the state, business, labour and society are aware of and support business leaders and government in formulating and implementing a national business strategy to address job growth and job sustainability in the country. Consequently, when considering the issue of regulation versus deregulation of the labour market, the parties should seek to find a balance between human dignity, increased profits and economic development. This problem is not just a business issue, but also a societal and legal issue. It is therefore important that policy makers heed the current legislative regulatory barriers and economic and political threats which could undermine job creation and job sustainability, as well as local and foreign business and investor confidence in South Africa. In light of the aforesaid, the recommendation is that there should be an increase in skills development to address the skills shortage in South Africa. Furthermore government should take steps, where necessary, to remedy the aforementioned and reduce administrative and compliance costs for businesses, which will assist and promote job creation and job sustainability in South Africa.